Millennium Post

MFs’ exposure to bank stocks hits 10-month low of Rs 35,442 crore

Amid continuing weakness in banking stocks, fund managers’ exposure to the sector has dropped to lowest level in 10 months and stood at Rs 35,442 crore at the end of June.

According to latest data available with the Sebi, Mutual Fund (MF) industry’s investment in banking stocks stood at Rs 35,442 crore as on 30 June, accounting for 19.63 per cent of their total equity assets under management (AUM) of Rs 1.80 lakh crore.This was their lowest exposure in the banking shares since August, when the total value of mutual fund investments in banking sector stood at Rs 32,970 crore.

The mutual fund exposure to banking stocks had rose to as high as Rs 43,659 crore in December 2012.Market participants attributed the decline in investment in banking shares to overall volatility in equity market.Bank stocks are also under-performing because of liquidity pressure due to various steps announced by the Reserve Bank of India (RBI) and deteriorating asset quality of public sector banks, an analyst said.
Besides, bottomlines of various public sector banks (PSBs) have also declined substantially because of higher provisioning.
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